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Tuesday, May 24, 2022

3 Things

Our flagship daily news show, where hosts Shashank Bhargava and Snigdha Sharma talk to in-house experts about what is going on and why you need to care about it.

Episode 1989 May 10, 2022

Atta prices at record high, tackling ‘negative press’, and UNSC on Ukraine

First, Indian Express’ Rural Affairs Editor Harish Damodaran joins host Shashank Bhargava to talk about why the price of wheat has been rising, and how it is expected to affect people.

Next, Indian Express’ Anisha Dutta talks about her exclusive report on the Ministry of Finance’s economic division working on a strategy to counter the negative coverage against India (10:02).

And in the end, Indian Express’ Associate Editor Shubhajit Roy talks about the United Nations Security Council’s first presidential statement regarding the Russian invasion of Ukraine (18:54).

 

TRANSCRIPT

Shashank Bhargava: Hi, I’m Shashank Bhargava, and you’re listening to 3 Things, The Indian Express news show. In this episode, we talk about the government strategizing to counter the negative commentary against it. We also talk about the first presidential statement by the United Nations Security Council regarding the Russian invasion of Ukraine, but first we talk about wheat flour or Atta. The price of wheat flour has been increasing for the past few months. In fact, last month, the all India monthly average retail price of wheat flour at 32.38 rupees per kg was at a record high. And this is because the production and the stock of wheat in India has fallen. And this has happened despite the fact that India was expecting a bumper crop this time. In this segment, Harish Damodaran Indian Express’s Rural Affairs Editor joins us to talk about why this has happened.

Harish Damodaran: I think the Atta prices have been rising basically in the last two three months onwards. And the main reason is because wheat is not available, we have had a very short crop. My guesses our wheat production this year has fallen, maybe 15 to 20%. Okay, minimum, so therefore, the government also doesn’t have any stocks, our wheat procurement is going to fall to a 15 year low this year. And this will be probably the first time when the government will be procuring less wheat than the stock it already has. Which is a little unusual, because as you know, any firm will typically will start any new year with less stocks, and it will try and sell more from new production or from new purchases. Okay, so the main reason is your wheat production this year is lower. And my guess is our production is not more than 90 to 95 million tonnes, whereas the government had predicted and a record output of something like 100 and 12 million tonnes,

Shashank Bhargava: Right. And the government was expecting this bumper harvest this time, and it had even planned to export wheat to countries across the world. But what is the reason that those expectations were not met, and we did not see that bumper harvest?

Harish Damodaran: See, the government was claiming not only a bumper but a record crop this year. And when the government made that prediction of 112 million tonnes, that was sometime in mid February, and actually at that point, the crop looked very good. But then we know what happened with this Heatwave, you know, it’s completely decimated the wheat crop, because as we know the heat came precisely at the time of grain filling and grain filling is the time when the wheat kernels start accumulating dry matter whether it is starch, protein, other nutrients etc. So basically the crop which has come out the grains have come out in a very shrivel form. So if we are talking of a production of say 90 to 95 million tonnes and not 112 million tonnes, that’s a huge drop. And it makes all the more difference in today’s scenario where international prices are also high. If I were to import wheat today, it won’t be available for less than $500 a tonne. So because of all this, we are now seeing wheat prices going up. And basically it’s a very deadly combination when both wheat and palm oil goes up. As you know that in bread or biscuits, it’s all basically these two ingredients. The same goes with your noodles. So you have a scenario where definitely Atta prices are rising and the government doesn’t have enough stocks like last year. And plus there is not enough stock even in the open market and which is why you see wheat prices have shot up so much and plus international prices are also high. So because of all of this, I think that in the next few months, we are going to see definitely wheat prices rising. And I won’t be surprised to see a wheat crossing 30 rupees and maybe after crossing 35 rupees and we are seeing it also in our bread having a standard loaf. You know that 400 gramme loaf which used to get you know white bread, which you are getting for about say 30 rupees today, I don’t think you get it for less than about 38-39 rupees. So we are seeing this definitely happening. So we are having a very strange inflation today were the two commodities which we took for granted, you know, wheat and edible oil. Both prices are really shooting up. And I don’t think it is going to be the end because the fact is that there is not too much wheat available in the market or with the government.

Shashank Bhargava: Okay, so you have a situation where, because of the heatwave, the wheat crop was really affected this year. You also have international prices of wheat being high because of the war in Ukraine. I mean, considering both Ukraine and Russia are high exporters of wheat. And the situation, as you mentioned, is even more serious because of the palm oil prices being high as well. But the other thing is that fuel prices for both diesel and petrol have been really high as well. has that affected the price of wheat.

Harish Damodaran: See, I would say that fuel prices obviously impacts all commodities, you know, not just specific to wheat and this kind of thing, little impact, even say milk prices, many things, because that affects the cost of transport in general. But in the case of wheat, this is very specific. So in the case of wheat, there are basically two factors. Number one, the war in Ukraine and Russia, as we know, I think those two countries together accounted for some 30% of the global exports. So, with those ports shut down and all these things with the black sea ports all shut down, not much exports having happening happening from them, So, automatically your world prices rose, but I think the second factor, which is still being underestimated is the damage to the Indian crop, you know, so, I think one reason why also international prices have been going up in the past one month is because the world has got to know that India is having a short crop, I think the world expected that maybe India will fill the void which was left by Russia and Ukraine. Now, when that is also not available. So, because of that now, you know suddenly international prices are rising because of that.

Shashank Bhargava: And Harish considering the extent to which Indians consume wheat, how much is this expected to affect people on a day to day basis?

Harish Damodaran: See wheat at one time was largely consumed in north India like in the south etc people hardly used to consume but today I think wheat is now consumed universally like for example, in South it is more Maida and Rava your Upma is made from Rava and with we Maida call this Purotta which is consumed in Kerala right the Malabar Parotta and same thing you know, like Puri, Upmaeven noodles and plus we know biscuits red so I think wheat is a very sensitive commodity you know, it’s a commodity of common consumption. And why this is a shock is because till say about six months back it is all free wheat which is going around and free wheat is what actually won the BJP the elections in Uttar Pradesh right. So, this sudden transformation it is quite unbelievable. Whereas I think in the case of edible oil, it was already rising even before the war I think even last year and the year before already prices had started rising like in Malaysia after COVID there was no availability of plantation labourers in the palm oil plantations there. So, there were all these kinds of problems in edible oil. But whereas in the case of wheat, it has been sudden, you know, sudden and unexpected and it has been entirely because of this heat shock, you know, the sudden rise in temperatures after mid March and I think we had that flaggers issue much before anybody else you know, and right from the beginning. So, I think we need something which is going to be very sensitive in the days because when we talk a week, I mean roti. So, I think it was much more whereas things like onion and all you know it is more I mean, I mean is not an essentials you know, but we are serious business and the government has to do something about it.

Shashank Bhargava: And Harish we also know that we eat is provided to people under various food security programmes like the Pradhan Mantri Garib Kalyan Anna Yojna will those programmes also be affected by this?

Harish Damodaran: I think so, see because as I said we had opening stocks of a 19 million tonnes and our procurement will be about say 18.5 million tonnes maximum. So that would be about 37.5 million tonnes and we need our end-year stocks to be at least 7.5 million tonnes which is sort of a buffer so that means you have about 30 million tonnes to play around. So out of the 30 million tonnes about 26 million tonnes is for the regular PDS which is the scheme which was continuing even before COVID etc even before the scheme which you are mentioning the Pradhan Mantri Garib Kalyan Yojana even prior to that, so about 26 million tonnes will be used up in the regular PDS which people get in their usual in the normal rations. So that leaves another 4 million tonnes and in the past about three to 4 million tonnes the FCI was also making available to flour Millers after october november during the lean season, it is more sort of what they call an open market sales scheme basically make available wheat after November December etc to flour mills and to other bulk consumers basically that is some kind of an open market operation as against selling through the PDS. So you need at any given time about say 4 million tonnes for open market operations and 26 million tonnes for the regular PDS. So when you add those two up, that itself is 30 million tonnes. So there is no scope for anything more than that because I think of the free grain scheme that is the predominantly the rebellion and the Yojana I think they had allocated about 10 point 9 million tonnes for April to September. But now I think they’ve already slashed it to I think about 4.5 million tonnes because they themselves know that the stalks are running out and also there is a danger that this free grain may actually get exported. So there’s a lot of scope for leakages, etc. So I think our wheat supply situation is very tight. So I think they’ll be a lot of news on wheat in the days ahead. So what’s the space.

Shashank Bhargava: And next we’ll talk about an exclusive report by the Indian Express. Back in 2020, when India was fighting its first wave of the pandemic, the Ministry of Finances economic division, was working on a strategy to counter the negative coverage that India had been getting during that time. And this is because the government was worried that because of the negative coverage, credit agencies like Moody’s would downgrade India’s sovereign rating, and such ratings by credit agencies are important because they significantly impact the country’s ability to borrow money, which can thereby affect its economy. Now, Indian Express got to know more about this exercise undertaken by the government through a 36 page presentation that was prepared by Sanjeev Sanyal, the principal economic adviser in the Ministry of Finance. In this segment, Indian Express’s Anisha Dutta,, who broke the story joins us to talk about it. So Anisha before we talk about your exclusive report, could you talk about the kind of negative press or commentary India was receiving before it undertook this exercise?

Anisha Dutta: So the negative commentary monitored by the government mainly refers to reports in 2019 and 2020. And these are all commentaries on the Jammu and Kashmir reorganisation act of 2019. The Citizenship Amendment Act 2019, the NRC, the construction of the Ram Mandir. So the common theme in the negative commentary mentioned in the presentation is also highlights the Hindu nationalist nature of the Bharatiya Janta Party. And mainly you know, the report says that this is seen as an exercise of targeting Muslims and threatening the secular nature of a country. So this negative commentary about India is what what did the government also and they mentioned that it’s becoming the opinion of sovereign rating agencies while publishing a country reports. So mainly, you know, these sovereign rating agencies weigh in what the World Bank’s world governance indicators says it is the most single most important input in all these ratings agencies. So all these factors are mentioned in the report, because according to the finance ministry, it also directly impacts the sovereign ratings.

Shashank Bhargava: Okay, so in order to counter this negative press, tell us what did the Ministry of Finance decide to do?

Anisha Dutta: So again, the presentation really highlights the importance of acting now, it mentions that there are subjective factors that impact India sovereign ratings, it talks about why there’s a need to pay attention to what the world governance indicators are saying. It also says that, you know, for the fall in the WGI, is going to downgrade a sovereign rating. So there was a thinking in the government that is very important to reach out to these think tanks and survey agencies and set a positive narrative about India in general.

Shashank Bhargava: And this presentation included 36 pages, what do we know about what all it included? And what were the kinds of things that were proposed?

Anisha Dutta: So it talks about the importance of sovereign ratings and how subjective factors enter into the decision making, it speaks about the subjective factors its mentioning includes its assessment of governance, political stability, rule of law in a country, corruption, press, freedom and so on. So there is a good analysis of how these factors enter our ratings. Then it talks about the importance of acting now because like we mentioned in our report, also it says that Ministry of Finances protests against these ratings reap no results. So they mentioned that this consistent negative commentary about India is also becoming the opinion of sovereign rating agencies, then it highlights the need to reach out to these agencies. There’s an analysis on what each and every global indices have spoken about India does an analysis of what Moody’s, Fitch, s&p are saying about India and mainly also how they’re impacting our WGI scores. So, it also importantly, mentions 15 Such top data sources that the WGI includes this includes your World Press Freedom Index, your democracy index by the Economics Intelligence Unit, it also includes Varieties of Democracy Project reports, Freedom House reports, so on and interestingly, you know, it points that out of the 15 such data sources they have collated, they mentioned three of them have an extremely negative stance on India. This includes the Economics Intelligence Unit or Varieties of Democracy Project and the Freedom House also the government mentioned that the rest 12 of them are relatively have a neutral stance in India. So idea is to reach out to these first it mentioned that these are the low hanging fruits. So the plan was to sort of reach out to these agencies first and then take it from there.

Shashank Bhargava: And you mentioned that the essential worry was that India’s sovereign rating would be downgraded. So why worry about it so much? What are the consequences that a country faces when its ratings downgraded?

Anisha Dutta: See, it’s very important. It basically gives the credit rating or an independent assessment of the creditworthiness of a country. So sovereign ratings basically give investors insights of the level of risk associated with investing in a country, the debt of a particular country, and most importantly, the political risks as well. So we can see that sovereign ratings really impact the country’s credit score, you can see countries like Sri Lanka who are suffering badly with default, both S and P and Moody’s have continuously downgraded their ratings. So yes, it is a very important factor, especially in terms of economic policy planning for a country.

Shashank Bhargava: Yeah. And we have seen, for example, that when countries whose ratings are downgraded, let’s say due to political instabilities, those countries when borrowing money are charged a much higher interest rate because of the risks associated with them, and which can then impact the overall economy of those countries. But now, in the past, India’s ratings have been downgraded. What were the reasons for that?

Anisha Dutta: So specifically, I will talk on Moody’s and Fitch and DBRS Morningstar. So in 2020, June, Moody’s downgraded India’s ratings and mentioned that the country’s scores are moderate on institution factors, as measured by the worldwide governance indicators, reflecting what is government and policy effectiveness compared with peers. And meanwhile, Fitch revised India’s Outlook to negative in 2020 June, and it mentions India’s geopolitical risks related to long standing border issues with countries like China. It also mentioned the relationship with Pakistan, which was negatively affected by the repeal of the special status for Kashmir. And also the recent changes to the status of illegal immigrants based on their religion switch also mentioned that the stronger focus by the ruling BJP on its Hindu nationalist agenda, since the government’s re election in May 2019, risks becoming a distraction for economic reforms and implementation and also could further raise social tensions. So it features again in DBRS Morningstar reading, which, in the meet when people in psi negative trend to India, and it mentioned that India has had episodes of elevated social tension. It also mentioned proposals such as the NRC and the CAA could lead to an intensification of social unrest and sectarian divisions within the populace. So this is what the ratings agencies were seeing in 2020. And this is right before this exercise began in June 2020. The idea was, again to of course, upgrade our ratings and reach out to these agencies in order to bring in a positive outlook.

Shashank Bhargava: And Anisha, having reported on it, and having seen this presentation by the government to counter. all the negative press, what is the thing that stands out to you the most about this?

Anisha Dutta: See, first of all, it’s an internal presentation was internal government exercise. So it gives us an insight on as to how the government thinks, most importantly, how policymakers are discussing these ratings. So what stands out most is one that exercise began in June 2020. Right around the time we were dealing with our first wave of COVID. It also, again, what stands out is that the government’s thought process is also to counter these negative commentaries. The government thinks that it is very important for narrative management. These are the terms that are repeatedly mentioned in presentation. It also says that, you know, it’s it’s very important to set a positive narrative about India by both think tanks and ratings agencies and the foreign media.

Shashank Bhargava: And in the end, we talk about the United Nations Security Council, or UNSC. One of the principal organs of the United Nations, which is charged with ensuring international peace and security. Last week, the UNSC issued its first presidential statement regarding the Russian invasion of Ukraine, which has been going on for over 10 weeks now, though the statement did not mention the word invasion, or conflict or war. Instead, it used the term dispute to describe the events. Indian Express’s Associate Editor Shubhajit Roy explains how the statement came about. Shubhajit, the UNSC on Saturday issued its presidential statement where it talked about Ukraine. Now before we talk about the statement itself, could you explain the significance of presidential statement has?

Shubhajit Roy: Well, you know, ever since the Russian invasion of Ukraine took place the UN Security Council has met several times. In fact, it had made before the question as well. But since the question it took place, it’s met several times. But it could never come up with the statement, which accommodated, everyone’s concerns the language or was acceptable to everyone. So a presidential statement is essentially issued only after there is unanimity amongst all 15 members, which includes five permanent and 10 non permanent members. Now, obviously, the permanent members have veto power. And either Russia or US, I mean, or other countries have the power to veto third statement. So because there was no unanimity on any of the statements or any of the resolutions in the last two and a half months. So there was no presentation statement that was issued after these meetings, or no resolution that was adopted in with unanimously. So that’s the relevance of a presidential statement, because it means that all the members, I mean, all the permanent members, as well as the non permanent members are, for the first time have signed off on a statement where the language is acceptable to everyone.

Shashank Bhargava: And the statement has been making news because it refers to the Russian invasion of Ukraine as a dispute. It does not include words like war, conflict, or even invasion. And this statement is being criticised by some for this reason. So why this description? And what do we know about how the statement came about?

Shubhajit Roy: So firstly, we have to understand that the two sides, which is the Russian side, and the Western countries led by us have not been able to find a common language for the last 10 weeks since the Russian invasion of Ukraine. Therefore, this statement is the first where they have found common ground. Now how does one found common ground is that it has tried to accommodate everyone’s language, everyone’s concerns, for example, the US, which is which holds the presidency of the UNSC for the month of May, or the Western countries, they describe the Russian invasion of Ukraine as either war, or invasion or conflict. On the other hand, the Russian side describes it as a special military operation. Now, these are two different ways to describe the same set of events in Ukraine. Obviously, any of these three or four words, war, invasion or conflict, which is used by the US at best to describe the events, or the special military operation used by Russia is not acceptable to both sides. So therefore, they have come up with a word which is acceptable to all sides. And that was dispute. Now, this particular statement, this particular word is obviously perceived to be a significantly diluted version, or a watered down version of the descriptions that both sides, but that had to be done by negotiators, who sort of spent last few weeks as I understand before they came up with this common acceptable language, where Russia was on board with the language. If you remember, in the past, Russia has locked in all the resolutions and using its veto power. So therefore, it has come under criticism. But what it also tells you is that for the first time in 10 weeks, this particular language is actually a common ground for both sides where they have signed off on a common unanimous consensus based presidential statement.

Shashank Bhargava: And considering we now have a statement that all the UNSC members agree on, could this help in advancing the talks between the two sides?

Shubhajit Roy: Yeah, obviously Shashank. You know, that is the hope that this particular statement is the starting point could be a starting point for future negotiations, as India has been sort of saying for the last two and a half months that, you know, direct talks between the two sides will only lead to peaceful resolution and dialogue and diplomacy is the only path forward towards the resolution of the situation. India has also flagged one of the things in the prior to the presidential statement being adopted, if you saw the statement, the two things India essentially has flagged one is that, you know, this conflict if it goes on like this and been already two and a half months, almost that it diplomacy will be the lasting casualty. And the other point that India has raised is about humanitarian aid. Which is a concern expressed by many, but India has articulated it for the first time before this presidential statement. And that is that right now, if World Food Programme sending humanitarian aid to Ukraine or the adjoining countries where refugees are fleeing and going there, there are no taxes for sending that aid. But if individual countries including India, if it sends humanitarian aid, it is subject to taxes, which India has sort of raised this issue that you know, even individual countries and other organisations other than World Food Programme should also be exempted from these taxes and these restrictions. Otherwise, it hampers providing humanitarian aid to people in need at this point of time.

Shashank Bhargava: You’re listening to 3 Things by the Indian Express. Today’s show was written and produced by me, Shashank Bhargava and was edited and mixed by Suresh Pawar. If you like the show, then do subscribe to us wherever you get your podcast. You can also recommend the show to someone you think would like it, share it with a friend or someone in your family. It’s the best way for people to get to know about us. You can tweet us @expresspodcasts and write to us at podcasts@indianexpress.com.

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Atta prices at record high, tackling ‘negative press’, and UNSC on UkraineFirst, Indian Express’ Rural Affairs Editor Harish Damodaran joins host Shashank Bhargava to talk about why the price of wheat has been rising, and how it is expected to affect people. Next, Indian Express’ Anisha Dutta talks about her exclusive report on the Ministry of Finance’s economic division working on a strategy to counter the negative coverage against India (10:02). And in the end, Indian Express’ Associate Editor Shubhajit Roy talks about the United Nations Security Council’s first presidential statement regarding the Russian invasion of Ukraine (18:54).   TRANSCRIPT Shashank Bhargava: Hi, I'm Shashank Bhargava, and you're listening to 3 Things, The Indian Express news show. In this episode, we talk about the government strategizing to counter the negative commentary against it. We also talk about the first presidential statement by the United Nations Security Council regarding the Russian invasion of Ukraine, but first we talk about wheat flour or Atta. The price of wheat flour has been increasing for the past few months. In fact, last month, the all India monthly average retail price of wheat flour at 32.38 rupees per kg was at a record high. And this is because the production and the stock of wheat in India has fallen. And this has happened despite the fact that India was expecting a bumper crop this time. In this segment, Harish Damodaran Indian Express's Rural Affairs Editor joins us to talk about why this has happened. Harish Damodaran: I think the Atta prices have been rising basically in the last two three months onwards. And the main reason is because wheat is not available, we have had a very short crop. My guesses our wheat production this year has fallen, maybe 15 to 20%. Okay, minimum, so therefore, the government also doesn't have any stocks, our wheat procurement is going to fall to a 15 year low this year. And this will be probably the first time when the government will be procuring less wheat than the stock it already has. Which is a little unusual, because as you know, any firm will typically will start any new year with less stocks, and it will try and sell more from new production or from new purchases. Okay, so the main reason is your wheat production this year is lower. And my guess is our production is not more than 90 to 95 million tonnes, whereas the government had predicted and a record output of something like 100 and 12 million tonnes, Shashank Bhargava: Right. And the government was expecting this bumper harvest this time, and it had even planned to export wheat to countries across the world. But what is the reason that those expectations were not met, and we did not see that bumper harvest? Harish Damodaran: See, the government was claiming not only a bumper but a record crop this year. And when the government made that prediction of 112 million tonnes, that was sometime in mid February, and actually at that point, the crop looked very good. But then we know what happened with this Heatwave, you know, it's completely decimated the wheat crop, because as we know the heat came precisely at the time of grain filling and grain filling is the time when the wheat kernels start accumulating dry matter whether it is starch, protein, other nutrients etc. So basically the crop which has come out the grains have come out in a very shrivel form. So if we are talking of a production of say 90 to 95 million tonnes and not 112 million tonnes, that's a huge drop. And it makes all the more difference in today's scenario where international prices are also high. If I were to import wheat today, it won't be available for less than $500 a tonne. So because of all this, we are now seeing wheat prices going up. And basically it's a very deadly combination when both wheat and palm oil goes up. As you know that in bread or biscuits, it's all basically these two ingredients. The same goes with your noodles. So you have a scenario where definitely Atta prices are rising and the government doesn't have enough stocks like last year. And plus there is not enough stock even in the open market and which is why you see wheat prices have shot up so much and plus international prices are also high. So because of all of this, I think that in the next few months, we are going to see definitely wheat prices rising. And I won't be surprised to see a wheat crossing 30 rupees and maybe after crossing 35 rupees and we are seeing it also in our bread having a standard loaf. You know that 400 gramme loaf which used to get you know white bread, which you are getting for about say 30 rupees today, I don't think you get it for less than about 38-39 rupees. So we are seeing this definitely happening. So we are having a very strange inflation today were the two commodities which we took for granted, you know, wheat and edible oil. Both prices are really shooting up. And I don't think it is going to be the end because the fact is that there is not too much wheat available in the market or with the government. Shashank Bhargava: Okay, so you have a situation where, because of the heatwave, the wheat crop was really affected this year. You also have international prices of wheat being high because of the war in Ukraine. I mean, considering both Ukraine and Russia are high exporters of wheat. And the situation, as you mentioned, is even more serious because of the palm oil prices being high as well. But the other thing is that fuel prices for both diesel and petrol have been really high as well. has that affected the price of wheat. Harish Damodaran: See, I would say that fuel prices obviously impacts all commodities, you know, not just specific to wheat and this kind of thing, little impact, even say milk prices, many things, because that affects the cost of transport in general. But in the case of wheat, this is very specific. So in the case of wheat, there are basically two factors. Number one, the war in Ukraine and Russia, as we know, I think those two countries together accounted for some 30% of the global exports. So, with those ports shut down and all these things with the black sea ports all shut down, not much exports having happening happening from them, So, automatically your world prices rose, but I think the second factor, which is still being underestimated is the damage to the Indian crop, you know, so, I think one reason why also international prices have been going up in the past one month is because the world has got to know that India is having a short crop, I think the world expected that maybe India will fill the void which was left by Russia and Ukraine. Now, when that is also not available. So, because of that now, you know suddenly international prices are rising because of that. Shashank Bhargava: And Harish considering the extent to which Indians consume wheat, how much is this expected to affect people on a day to day basis? Harish Damodaran: See wheat at one time was largely consumed in north India like in the south etc people hardly used to consume but today I think wheat is now consumed universally like for example, in South it is more Maida and Rava your Upma is made from Rava and with we Maida call this Purotta which is consumed in Kerala right the Malabar Parotta and same thing you know, like Puri, Upmaeven noodles and plus we know biscuits red so I think wheat is a very sensitive commodity you know, it's a commodity of common consumption. And why this is a shock is because till say about six months back it is all free wheat which is going around and free wheat is what actually won the BJP the elections in Uttar Pradesh right. So, this sudden transformation it is quite unbelievable. Whereas I think in the case of edible oil, it was already rising even before the war I think even last year and the year before already prices had started rising like in Malaysia after COVID there was no availability of plantation labourers in the palm oil plantations there. So, there were all these kinds of problems in edible oil. But whereas in the case of wheat, it has been sudden, you know, sudden and unexpected and it has been entirely because of this heat shock, you know, the sudden rise in temperatures after mid March and I think we had that flaggers issue much before anybody else you know, and right from the beginning. So, I think we need something which is going to be very sensitive in the days because when we talk a week, I mean roti. So, I think it was much more whereas things like onion and all you know it is more I mean, I mean is not an essentials you know, but we are serious business and the government has to do something about it. Shashank Bhargava: And Harish we also know that we eat is provided to people under various food security programmes like the Pradhan Mantri Garib Kalyan Anna Yojna will those programmes also be affected by this? Harish Damodaran: I think so, see because as I said we had opening stocks of a 19 million tonnes and our procurement will be about say 18.5 million tonnes maximum. So that would be about 37.5 million tonnes and we need our end-year stocks to be at least 7.5 million tonnes which is sort of a buffer so that means you have about 30 million tonnes to play around. So out of the 30 million tonnes about 26 million tonnes is for the regular PDS which is the scheme which was continuing even before COVID etc even before the scheme which you are mentioning the Pradhan Mantri Garib Kalyan Yojana even prior to that, so about 26 million tonnes will be used up in the regular PDS which people get in their usual in the normal rations. So that leaves another 4 million tonnes and in the past about three to 4 million tonnes the FCI was also making available to flour Millers after october november during the lean season, it is more sort of what they call an open market sales scheme basically make available wheat after November December etc to flour mills and to other bulk consumers basically that is some kind of an open market operation as against selling through the PDS. So you need at any given time about say 4 million tonnes for open market operations and 26 million tonnes for the regular PDS. So when you add those two up, that itself is 30 million tonnes. So there is no scope for anything more than that because I think of the free grain scheme that is the predominantly the rebellion and the Yojana I think they had allocated about 10 point 9 million tonnes for April to September. But now I think they've already slashed it to I think about 4.5 million tonnes because they themselves know that the stalks are running out and also there is a danger that this free grain may actually get exported. So there's a lot of scope for leakages, etc. So I think our wheat supply situation is very tight. So I think they'll be a lot of news on wheat in the days ahead. So what's the space. Shashank Bhargava: And next we'll talk about an exclusive report by the Indian Express. Back in 2020, when India was fighting its first wave of the pandemic, the Ministry of Finances economic division, was working on a strategy to counter the negative coverage that India had been getting during that time. And this is because the government was worried that because of the negative coverage, credit agencies like Moody's would downgrade India's sovereign rating, and such ratings by credit agencies are important because they significantly impact the country's ability to borrow money, which can thereby affect its economy. Now, Indian Express got to know more about this exercise undertaken by the government through a 36 page presentation that was prepared by Sanjeev Sanyal, the principal economic adviser in the Ministry of Finance. In this segment, Indian Express's Anisha Dutta,, who broke the story joins us to talk about it. So Anisha before we talk about your exclusive report, could you talk about the kind of negative press or commentary India was receiving before it undertook this exercise? Anisha Dutta: So the negative commentary monitored by the government mainly refers to reports in 2019 and 2020. And these are all commentaries on the Jammu and Kashmir reorganisation act of 2019. The Citizenship Amendment Act 2019, the NRC, the construction of the Ram Mandir. So the common theme in the negative commentary mentioned in the presentation is also highlights the Hindu nationalist nature of the Bharatiya Janta Party. And mainly you know, the report says that this is seen as an exercise of targeting Muslims and threatening the secular nature of a country. So this negative commentary about India is what what did the government also and they mentioned that it's becoming the opinion of sovereign rating agencies while publishing a country reports. So mainly, you know, these sovereign rating agencies weigh in what the World Bank's world governance indicators says it is the most single most important input in all these ratings agencies. So all these factors are mentioned in the report, because according to the finance ministry, it also directly impacts the sovereign ratings. Shashank Bhargava: Okay, so in order to counter this negative press, tell us what did the Ministry of Finance decide to do? Anisha Dutta: So again, the presentation really highlights the importance of acting now, it mentions that there are subjective factors that impact India sovereign ratings, it talks about why there's a need to pay attention to what the world governance indicators are saying. It also says that, you know, for the fall in the WGI, is going to downgrade a sovereign rating. So there was a thinking in the government that is very important to reach out to these think tanks and survey agencies and set a positive narrative about India in general. Shashank Bhargava: And this presentation included 36 pages, what do we know about what all it included? And what were the kinds of things that were proposed? Anisha Dutta: So it talks about the importance of sovereign ratings and how subjective factors enter into the decision making, it speaks about the subjective factors its mentioning includes its assessment of governance, political stability, rule of law in a country, corruption, press, freedom and so on. So there is a good analysis of how these factors enter our ratings. Then it talks about the importance of acting now because like we mentioned in our report, also it says that Ministry of Finances protests against these ratings reap no results. So they mentioned that this consistent negative commentary about India is also becoming the opinion of sovereign rating agencies, then it highlights the need to reach out to these agencies. There's an analysis on what each and every global indices have spoken about India does an analysis of what Moody's, Fitch, s&p are saying about India and mainly also how they're impacting our WGI scores. So, it also importantly, mentions 15 Such top data sources that the WGI includes this includes your World Press Freedom Index, your democracy index by the Economics Intelligence Unit, it also includes Varieties of Democracy Project reports, Freedom House reports, so on and interestingly, you know, it points that out of the 15 such data sources they have collated, they mentioned three of them have an extremely negative stance on India. This includes the Economics Intelligence Unit or Varieties of Democracy Project and the Freedom House also the government mentioned that the rest 12 of them are relatively have a neutral stance in India. So idea is to reach out to these first it mentioned that these are the low hanging fruits. So the plan was to sort of reach out to these agencies first and then take it from there. Shashank Bhargava: And you mentioned that the essential worry was that India's sovereign rating would be downgraded. So why worry about it so much? What are the consequences that a country faces when its ratings downgraded? Anisha Dutta: See, it's very important. It basically gives the credit rating or an independent assessment of the creditworthiness of a country. So sovereign ratings basically give investors insights of the level of risk associated with investing in a country, the debt of a particular country, and most importantly, the political risks as well. So we can see that sovereign ratings really impact the country's credit score, you can see countries like Sri Lanka who are suffering badly with default, both S and P and Moody's have continuously downgraded their ratings. So yes, it is a very important factor, especially in terms of economic policy planning for a country. Shashank Bhargava: Yeah. And we have seen, for example, that when countries whose ratings are downgraded, let's say due to political instabilities, those countries when borrowing money are charged a much higher interest rate because of the risks associated with them, and which can then impact the overall economy of those countries. But now, in the past, India's ratings have been downgraded. What were the reasons for that? Anisha Dutta: So specifically, I will talk on Moody's and Fitch and DBRS Morningstar. So in 2020, June, Moody's downgraded India's ratings and mentioned that the country's scores are moderate on institution factors, as measured by the worldwide governance indicators, reflecting what is government and policy effectiveness compared with peers. And meanwhile, Fitch revised India's Outlook to negative in 2020 June, and it mentions India's geopolitical risks related to long standing border issues with countries like China. It also mentioned the relationship with Pakistan, which was negatively affected by the repeal of the special status for Kashmir. And also the recent changes to the status of illegal immigrants based on their religion switch also mentioned that the stronger focus by the ruling BJP on its Hindu nationalist agenda, since the government's re election in May 2019, risks becoming a distraction for economic reforms and implementation and also could further raise social tensions. So it features again in DBRS Morningstar reading, which, in the meet when people in psi negative trend to India, and it mentioned that India has had episodes of elevated social tension. It also mentioned proposals such as the NRC and the CAA could lead to an intensification of social unrest and sectarian divisions within the populace. So this is what the ratings agencies were seeing in 2020. And this is right before this exercise began in June 2020. The idea was, again to of course, upgrade our ratings and reach out to these agencies in order to bring in a positive outlook. Shashank Bhargava: And Anisha, having reported on it, and having seen this presentation by the government to counter. all the negative press, what is the thing that stands out to you the most about this? Anisha Dutta: See, first of all, it's an internal presentation was internal government exercise. So it gives us an insight on as to how the government thinks, most importantly, how policymakers are discussing these ratings. So what stands out most is one that exercise began in June 2020. Right around the time we were dealing with our first wave of COVID. It also, again, what stands out is that the government's thought process is also to counter these negative commentaries. The government thinks that it is very important for narrative management. These are the terms that are repeatedly mentioned in presentation. It also says that, you know, it's it's very important to set a positive narrative about India by both think tanks and ratings agencies and the foreign media. Shashank Bhargava: And in the end, we talk about the United Nations Security Council, or UNSC. One of the principal organs of the United Nations, which is charged with ensuring international peace and security. Last week, the UNSC issued its first presidential statement regarding the Russian invasion of Ukraine, which has been going on for over 10 weeks now, though the statement did not mention the word invasion, or conflict or war. Instead, it used the term dispute to describe the events. Indian Express's Associate Editor Shubhajit Roy explains how the statement came about. Shubhajit, the UNSC on Saturday issued its presidential statement where it talked about Ukraine. Now before we talk about the statement itself, could you explain the significance of presidential statement has? Shubhajit Roy: Well, you know, ever since the Russian invasion of Ukraine took place the UN Security Council has met several times. In fact, it had made before the question as well. But since the question it took place, it's met several times. But it could never come up with the statement, which accommodated, everyone's concerns the language or was acceptable to everyone. So a presidential statement is essentially issued only after there is unanimity amongst all 15 members, which includes five permanent and 10 non permanent members. Now, obviously, the permanent members have veto power. And either Russia or US, I mean, or other countries have the power to veto third statement. So because there was no unanimity on any of the statements or any of the resolutions in the last two and a half months. So there was no presentation statement that was issued after these meetings, or no resolution that was adopted in with unanimously. So that's the relevance of a presidential statement, because it means that all the members, I mean, all the permanent members, as well as the non permanent members are, for the first time have signed off on a statement where the language is acceptable to everyone. Shashank Bhargava: And the statement has been making news because it refers to the Russian invasion of Ukraine as a dispute. It does not include words like war, conflict, or even invasion. And this statement is being criticised by some for this reason. So why this description? And what do we know about how the statement came about? Shubhajit Roy: So firstly, we have to understand that the two sides, which is the Russian side, and the Western countries led by us have not been able to find a common language for the last 10 weeks since the Russian invasion of Ukraine. Therefore, this statement is the first where they have found common ground. Now how does one found common ground is that it has tried to accommodate everyone's language, everyone's concerns, for example, the US, which is which holds the presidency of the UNSC for the month of May, or the Western countries, they describe the Russian invasion of Ukraine as either war, or invasion or conflict. On the other hand, the Russian side describes it as a special military operation. Now, these are two different ways to describe the same set of events in Ukraine. Obviously, any of these three or four words, war, invasion or conflict, which is used by the US at best to describe the events, or the special military operation used by Russia is not acceptable to both sides. So therefore, they have come up with a word which is acceptable to all sides. And that was dispute. Now, this particular statement, this particular word is obviously perceived to be a significantly diluted version, or a watered down version of the descriptions that both sides, but that had to be done by negotiators, who sort of spent last few weeks as I understand before they came up with this common acceptable language, where Russia was on board with the language. If you remember, in the past, Russia has locked in all the resolutions and using its veto power. So therefore, it has come under criticism. But what it also tells you is that for the first time in 10 weeks, this particular language is actually a common ground for both sides where they have signed off on a common unanimous consensus based presidential statement. Shashank Bhargava: And considering we now have a statement that all the UNSC members agree on, could this help in advancing the talks between the two sides? Shubhajit Roy: Yeah, obviously Shashank. You know, that is the hope that this particular statement is the starting point could be a starting point for future negotiations, as India has been sort of saying for the last two and a half months that, you know, direct talks between the two sides will only lead to peaceful resolution and dialogue and diplomacy is the only path forward towards the resolution of the situation. India has also flagged one of the things in the prior to the presidential statement being adopted, if you saw the statement, the two things India essentially has flagged one is that, you know, this conflict if it goes on like this and been already two and a half months, almost that it diplomacy will be the lasting casualty. And the other point that India has raised is about humanitarian aid. Which is a concern expressed by many, but India has articulated it for the first time before this presidential statement. And that is that right now, if World Food Programme sending humanitarian aid to Ukraine or the adjoining countries where refugees are fleeing and going there, there are no taxes for sending that aid. But if individual countries including India, if it sends humanitarian aid, it is subject to taxes, which India has sort of raised this issue that you know, even individual countries and other organisations other than World Food Programme should also be exempted from these taxes and these restrictions. Otherwise, it hampers providing humanitarian aid to people in need at this point of time. Shashank Bhargava: You're listening to 3 Things by the Indian Express. Today's show was written and produced by me, Shashank Bhargava and was edited and mixed by Suresh Pawar. If you like the show, then do subscribe to us wherever you get your podcast. You can also recommend the show to someone you think would like it, share it with a friend or someone in your family. It's the best way for people to get to know about us. You can tweet us @expresspodcasts and write to us at podcasts@indianexpress.com.
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